Definitions
- Referring to a group of companies or organizations that work together to control and manipulate prices, production, and distribution of goods or services. - Describing an illegal agreement among businesses to limit competition and increase profits. - Talking about a collusive arrangement where companies cooperate to restrict supply and fix prices in order to maximize their own profits.
- Describing a market structure where a small number of large firms dominate the industry. - Referring to a situation where a few powerful companies have significant control over the market. - Talking about an industry characterized by limited competition due to high barriers to entry.
List of Similarities
- 1Both refer to situations where a small number of companies have significant control over a market.
- 2Both involve limited competition and the potential for collusion among companies.
- 3Both can lead to higher prices and reduced consumer choice.
- 4Both are market structures that can result in anti-competitive behavior.
- 5Both can have negative effects on market efficiency and fairness.
What is the difference?
- 1Definition: A cartel specifically refers to a group of companies that collude to control prices and production, while an oligopoly refers to a market structure dominated by a small number of large firms.
- 2Legality: Cartels are generally illegal and considered anti-competitive, while oligopolies can be legal but may still raise concerns about market concentration and competition.
- 3Collusion: Cartels involve explicit agreements among companies to coordinate their actions, while oligopolies may or may not involve collusion.
- 4Scope: Cartels typically focus on a specific industry or product, while oligopolies can exist in various industries.
- 5Control: Cartels have centralized control over pricing and production decisions, while oligopolies may have more decentralized decision-making processes.
Remember this!
While both cartel and oligopoly describe situations where a small number of companies have significant control over a market, there are important differences between them. A cartel refers to a collusive arrangement among companies to control prices and production, often illegally. On the other hand, an oligopoly describes a market structure dominated by a few large firms, which may or may not involve collusion. While cartels are generally illegal, oligopolies can be legal but still raise concerns about competition and market concentration.
